By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
Why is not taxable income used to determine if a distribution is a dividend? 4. What are the ownership requirements for a group of corporations to file a consolidated return? 5. What is a corporate redemption?
Chapter 07 - The Revenue and Collection Cycle Chapter 07 The Revenue and Collection Cycle Multiple Choice Questions 1. To be recognized, revenues must also be realized or realizable and A. Foreseeable B. Collected C. Earned D. Shipped 2. The SEC requires all of the following for revenue to be recognized except A.
As indicated in the definition of contingency, the term loss is used for convenience to include many charges against income that are commonly referred to as expenses and others that are commonly referred to as losses. The Contingencies Topic uses the terms probable, reasonably possible, and remote to identify three areas within that range.” Moreover, ASC 450-20-25-2 shows that “An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: a. Information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. Date of the financial statements means the end of the most recent accounting period for which financial statements are being presented. It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss.
All partners share in the decision making for the business. A partnership agreement is usually established in order to delegate the responsibilities of each partner such as who will make decisions for the business, how will profits and losses be shared, how much money and time each partner will contribute and even a plan in the event a partner chooses to terminate their share of the business. The main advantage of this entity is that it allows more expertise as well as financial support in order to make a business grow. The main disadvantage is that just like the sole proprietorship, the personal assets of each partner will not be spared if the company faces financial
When the price of a good falls and the price of other goods and a consumer’s income remain the same, explain what happens to the consumption of the good whose price has fallen and to the consumption of other goods. Answer: When the price of a good falls and the price of other goods and a consumer’s income remains the same, there will be more consumption of a good and other goods. 10. If a consumer’s income increases and if all goods are normal goods, explain how the quantity bought of each good changes. Answer: The consumer must determine the quantities of movies and soda that make their marginal utilities per dollar.
2. A Statement of Unrestricted Revenues, Expenses, and Other Changes in Unrestricted Net Assets. 3. A Statement of Changes in Net Assets. Your paper must: 1.
The vendor will be function in effort to make a profit as is with all businesses. The problems can come when the vendor needs to increase profit and since the contracts are normally a fixed price, the only way for them to do so is to decrease expenses. This is a viable option as long as they meet the conditions specified in the contract (Bucki, 2012). When outsourcing to another company, your organization is now tied to the financial well-being of the vendor. The problem can arise when after contracting out the IT functions of the organization and paying the fees negotiated, the vendor goes bankrupt leaving the companies who have contracted to them without an IT resource (Bucki,
For acquired assets that are not a business, they shall be accounted for as an asset acquisition. The four components of the acquisition method include: 1) identify the acquirer, 2) identify the acquisition date, 3) recognizing and
CAGR: Operating income, % Operating income (EBIT) measures a company's earning power from ongoing operations and it largely used by investor because it excludes the effects of different capital structures and tax rates used in different companies. EBIT is "capital structure neutral" and is therefore a more appropriate way of comparing the earnings of different companies than net income